Square Feet

The owner of the Savoy Hotel in London, Prince al-Walid bin Talal, is proposing a Mile High Tower in a sea port town near Jeddah in Saudi Arabia. This building, if it is even possible, would be more than twice the height of its nearest competitor.

Estimated to cost approximately $10 Billion dollars to construct, this building will likely put all engineering theories to the test. I can’t even begin to think how the engineers will handle issues such as counterweights and building systems.

On a personal level, I think this is as just excessive and completely unneccessary. I wonder what the carbon footprint of this thing is. I’d hate to have to calculate that too.

The San Francisco Building Inspections Commission voted in favor on enacting new green building requirements. The requirements would require almost all commercial buildings (those bigger than 5,000 square feet) to comply with LEED standards. In addition, residential structures exceeding 75 feet in height and other buildings in excess of 25,000 square feet must also comply with LEED standards.

The new guidelines will need to be signed into law by the Mayor, but he has indicated that if they are passed by the Board he would do so. It should be noted that the new building requirements would not be fully implemented until 2012.

These requirements will likely become codified in more and more cities over the next several years.

Under current law, only 2.5% of a improvement costs to a commercial (or residential) property could be written off in the first year. The new economic stimulus package now allows for up to 50% of the improvement costs to be written off the first year provided the work is started and completed this year.

This will likely spur some activity both on the leasing front as well as construction front as Landlords and Tenants both will seek to take advantage of the favorable tax treatment.

KT Properties has acquired the property locatd at 1 South Market St in Downtown San Jose from Haury Properties. Plans for the site include high-rise condominiums but could be changed to office if the demand materializes. KT and its partners are currently developing the AXIS residential condo project located at Santa Clara and N Almaden Boulevard.

Haury originally had been holding the site for office development but later changed those plans into residential as the office market cooled.

The city seems to prefer that the 1 S Market site go office but it doesn’t make any sense at current rents Downtonw. Legacy is in the process of building the second tower at RiverPark on W San Carlos, and the BEA building is up in the air now that Oracle is acquiring them. In addition, Boston Properties and Barry Swenson control land downtown at a lower cost basis which could go office.

As part of their cost cutting plan, Hewlett Packard is reducing its footprint in Cupertino and Palo Alto by approximately 25%. In addition, HP has in the recent past been divesting some assets it owned in the South Bay cities of Cupertino and Mountain View.

The plan is to more efficiently use space and is not a result of layoffs. HP has bounced back in recent years under the leadership of Mark Hurd, who made it part of his plan to reduce real estate costs.

Over the past five years, a group of developers which included Shapell, Citation, and Keenan have been funding the planning process for Coyote Valley in South San Jose. The Coyote Valley has over the past two decades been considered as a place where companies could build additional campuses, with the latest campus plans belonging to Cisco Systems. Those plans fell apart in 2000, along with another Fremont campus Cisco had planned, after economic conditions changed.

Since then, developers have been funding the planning process to the tune of $17M. Another $2.5M was due to be funded, but in the light of the current housing and economic conditions the project is for now being put on hold because it is not economically viable.

The Coyote Valley plan called for as many as 25,000 housing units along with commercial space for 50,000 jobs. Because the city of San Jose requires that staff time be reimbursed, the developers have been footing much of the bill.

The developers will undoubtedly resurface once housing conditions stabilize, and possibly sooner if a large campus user is able to step up and commit to occupying a large campus in Coyote Valley, but for the time being, either scenario seems to be unlikely anytime soon.

The Broadway Plaza Shopping Center in Walnut Creek is working with city officials and existing tenants to bring a 100,000 square feet Nieman Marcus to the center. The stores is slated to be located at South Main Street and Mount Diablo Boulevard, and is scheduled to open around early 2011.

The shopping center is owned by Macerich and Northwestern Mutual Life, and has benefitted from the rapidly improving demographics in the east bay city over the past decade. Average rents in the center now exceed $750 psf.